Good afternoon. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to Sagicor Financial Company fourth quarter and full year 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star, then one o n your telephone keypad. If you'd like to withdraw your question, please press star, then two. Thank you. Mr. George Sipsis, EVP, Corporate Development and Capital Markets, you may begin your conference.
Great. Thank you, operator. Hello, everyone, and thank you for joining us today to discuss Sagicor's 2022 fourth quarter and full year results. Before we begin, I'd like to point you to our Q4 results, including the financial statements, the MD&A, the press release, along with a link to our live webcast is available on our website under the Investor Relations tab at sagicor.com. This conference call is open to the financial community, the media, and the public, with a reminder that the Q&A period at the end is reserved for the financial research analysts. I would like to begin by referring you to the cautionary language and disclaimers in our materials and public filings regarding the use of forward-looking statements and the use of non-IFRS financial measures and ratios, which may be mentioned as part of our remarks today.
I would like to remind the audience that actual results with regard to forward-looking information could differ materially. Please note that a detailed discussion of Sagicor's risk factors is provided in our MD&A and AIF available on SEDAR and on our website, along with a discussion of the assumptions underlying our IFRS 17 and 2024 expectations is provided in our earnings release. Comments made in reference to the pending acquisition of ivari are made based on assumptions made in respect of business strategies, including economic conditions and other factors that with actual results may differ. Sagicor expects the acquisition to close in Q2 or Q3 of 2023, pending satisfaction of regulatory and other customary closing conditions. Investors can find ivari's financials on the OSFI website. Unless otherwise noted, all dollar amounts referenced will be in US dollars consistent with our reporting practice.
Joining me today is our Group President and CEO, Doddridge Miller, Andre Mousseau, our Group Chief Operating Officer and incoming Group President and CEO, Anthony Chandler, our Group Chief Controller, and Kathy Jenkins, our new Group CFO. We'll begin with prepared remarks by Doddridge and Andre, followed by a Q&A session. With that, I will pass the call to our Group President and CEO, Doddridge Miller.
Thank you, George, and thank you everyone for joining us today. In keeping with our usual format, I will give some brief remarks focusing on our performance for the year, and I will also highlight recent changes to our executive management. Andre will do most of the heavy lifting and will provide details on our financial and operating performance, as well as some preliminary guidance as we adopt IFRS 17. Looking back on last year, 2022 was a strong year for the Sagicor Group. Total revenue for the full year increased 8% over 2021 to reach over $2.5 billion. From that revenue, we delivered net income to shareholders of $116 million. All three main business segments made strong contributions to these results.
In addition to the financial performance, we continue to improve our products, systems and processes as our markets adjust to and expect a wider range of digital engagement. I want to commend our teams across the Sagicor group for their exceptional contributions in delivering another strong year of results for our shareholders. As was announced in January, I will retire as Group President and Chief Executive Officer at the end of March after more than 30 years with the company and more than 20 years as the Chief Executive. This will therefore be my last earnings call. It's been a great pleasure working with the Sagicor team to serve our stakeholders, and I look forward to the continued success of the company under Andre's leadership. I will continue to give my support as a board member.
Along with Andre's appointment as Group President and CEO, we've made two additional changes to our executive team. Kathryn Jenkins was appointed as the Group Chief Financial Officer. George Sipsis was promoted to Executive Vice President, Corporate Development and Capital Markets. Kathy brings a wealth of experience and deep understanding of the financial services industry from a career spanning more than 30 years. She is on the call today and will take up the baton of drilling down on our financial results, starting in our Q1 earnings call in May. George joined Sagicor in 2021. We are pleased to recognize his increasingly important role within the executive team. George has contributed to many of our key capital raising and acquisition initiatives since joining nearly two years ago. We look forward to more contributions to Sagicor in his new role.
2022 was a strong year for Sagicor, the outlook for our company is stronger than ever. We have excellent market-leading businesses in the Caribbean and a fast-growing business in the U.S. We have also taken major steps to accelerate growth through the transformational acquisition of ivari in Canada. Under our new leadership, we look forward to our future. I want to thank our shareholders, customers, management, and staff for their support over the last 30-plus years, I'm confident that our company is well positioned to support you through all aspects of your life's journey. I now turn the presentation over to Andre Mousseau. Thank you.
Thank you, Doddridge. It was a busy Q4. Let's get into it. Net income for the quarter was $13 million, which was down $42 million, the, in the prior year. Total comprehensive income for the quarter was $56 million compared to $7 million in the prior year. This brought our book value up to CAD 10.28 per share. These results include what is, in effect, a $30 million adjustment out of net income and into other comprehensive income from an internal transaction earlier in the year. The change comes from the characterization of an intercompany elimination related to an asset transfer that we did between our U.S. and Bermuda subsidiaries, all under the umbrella of the Sagicor USA segment in our segmented results.
In that transaction, we moved assets that were held at below their original purchase price due to rising interest rates, and we eliminated the loss on consolidation. In Q2 and Q3, we did this through the income statement. However, during the year-end review, we determined the co-consolidation elimination would have been better classified as other comprehensive income rather than net income. We reversed $30 million of net income into OCI in Q4. That means reported net income in the fourth quarter was lower than the underlying profitability of our business, but the OCI is higher than we would have otherwise expected, given the moderate asset price movements in the quarter. Overall, the total comprehensive income in the quarter is unchanged by this reallocation.
Total comprehensive income in each of the quarters earlier this year is unchanged by the reallocation and all balance sheet figures are unchanged or unaffected. I'll now provide detail on our operating segment performances during the quarter. At Sagicor Life, our operating segment in the Southern Caribbean, total revenue was $177 million, a 36% increase over Q4 2021, mainly due to a 57% year-over-year growth in net premium revenue, which was fueled by strong new annuity revenue of $54 million. Net income to shareholders was $14 million, a 34% decrease compared to the same quarter in 2021.
Net income benefited from positive basis changes in Q4, as we often do, as we revisit our annual actuarial assumptions, but it was lower than our target as we saw some residual negative emergence from our insurance books. At Sagicor Jamaica, total revenue of $184 million decreased 9% year-over-year measured in US dollars, mainly due to lower asset prices on financial assets carried at fair value through the P&L, which runs through revenue. Net premium revenue increased 4% year-over-year, driven by growth in the core life and health business lines, and interest income also increased by 15%. Our share of Sagicor Jamaica's net income was $18 million, an increase of 10% compared to Q4 2021. Now on to Sagicor Life USA.
Having nearly achieved our annual targets through the first nine months, we slowed our production in Q4 to ensure we stayed within our capital budget. We generated $88 million of new annuity sales in the quarter. In total, we sold just over $1.2 billion of annuities in 2022, which was consistent with our targets. In total, our U.S. business posted $158 million of revenue in the quarter, which was down 45% compared to Q4 of 2021, again due to those lower sales. Excluding the adjustment that I spoke about earlier, the segment would have posted solid net income of $30 million compared to $17 million in the prior year, driven by continued strong growth of the investment portfolio invested at the improved spreads that we've been talking about throughout the year.
In the quarter, we also took proactive steps to fortify our capital ahead of our pending acquisition of ivari. We signed an agreement to reinsure some remote risk on a significant proportion of our recent U.S. production. We did that with a major reinsurer. As a result, combined with total comprehensive income and asset price recovery in the quarter, our consolidated MCCSR of our insurance subsidiaries increased 66 points compared to last quarter to $270 million, or 270%, I should say, which was consistent with where it was at the end of 2021. I know we've spoken about this. We still use the MCCSR as many of our markets are transitioning to LICAT.
As we bring Canadian business into the fold in 2023, we do intend to provide consolidated LICAT for our for external purposes by the time we are announcing our full year 2023 financials. Taking a step back and looking at the year, as Doddridge said, it was very solid. We delivered $116 million of net income to shareholders.
Total comprehensive loss was $17 million, which reflected $135 million of negative other comprehensive income, the vast majority of which was mark-to-market on our assets backing capital, which we would expect to earn back in future periods as we hold those assets to maturity. The $116 million in aggregate was consistent with our targets and included approximately $4 million of transaction related expenses, related to the pending ivari acquisition, about $18 million of mark-to-market losses on Playa, our shareholdings in Playa Hotels & Resorts, which have since more than reversed in Q1 of 2023. Excluding those metrics, we would have had net income of approximately $140 million, which would have been above our overall targets for our last year under IFRS 4.
We have two major initiatives that we'd like to update you on. The first is the acquisition of ivari. ivari's normalized net income has performed well since we signed the transaction. We've been engaged with management at ivari and the regulators at OSFI, we believe that the conversations continue to be constructive. We'd expect to close the transaction in around the midpoint of the year, so potentially into Q3. We continue to be excited about both the financial and strategic benefits of that transaction. Second, we are running full speed in the final mile of our IFRS 17 implementation. As we've been closing our Q4 financials under the old IFRS 4 regime for the last time, we're doing our final comparators under IFRS 17. These comparators are gonna look very different.
Our balance sheet is gonna look very different and our income statement as well. Our individual operating segments are gonna be changed in different ways too. In general, the higher proportion of its business in individual life and annuities, which have long reserves, the more the balance sheet will move a portion of its equity into CSM. Likewise, the faster a business has been growing over the last couple of years, the more different net income is gonna look as we no longer will be taking gains from new business. Instead, we're gonna replace that with amortization of profits from the existing books. As an example where we take the USA with $1.2 billion of production last year, that would have been consistent with a stable asset base of, say, $8 billion-$10 billion.
At that level, we would have expect net income to be relatively unchanged under IFRS 17 versus IFRS 4. As we've been growing that business, our balance sheet in the US has about $4.2 billion of financial investment. Our run rate net income will be significantly lower than the $140 million of segment net income that we saw out of the US this year. The same effect will happen for our other segments, to, but to a lesser extent. As we roll into the 2023 reporting system, we will roll out new KPIs and metrics, and the IFRS 17 reporting itself will have a good source of earnings, which I know is something that we've been talking about providing to the financial community.
At this point, we're releasing preliminary guidance that we expect our shareholders' equity at transition and including our pro forma for the acquisition of ivari to be approximately $650 million-$725 million, and that we expect to have CSM to shareholders of approximately $1.2 billion-$1.3 billion on top of that. That means total shareholders equity and CSM to shareholders of approximately $1.8 billion-$2.0 billion.
For 2024, which we would see as our first clean year with full year of ivari in it, we would expect return on shareholders' equity of mid-teens, approximately 14%-16%, high single digit CSM to shareholders' growth, and double digit net income to shareholders' growth. As I said, these numbers are inclusive of ivari, which we expect to close in Q2 or Q3. We do expect ivari to be meaningfully accretive on a book value and earnings basis and approximately neutral to ROE. On a standalone basis before ivari, we would expect our combined book value and CSM to be approximately equal to our current book value, as a meaningful proportion of our future profits are moved or taken into CSM.
We think that the right way for ourselves and for our investors to analyze the company is pro forma the closure of the acquisition. Finally, on behalf of all of Sagicor, I would like to sincerely thank Doddridge Miller for his three decades of tireless contribution and two decades of leadership. Sagicor and its thousands of employees and policyholders and countless members of the communities in the over two dozen countries in which Sagicor operates are better off for his service. For that, we are all grateful, and we look forward to Doddridge's continuing contribution on our board. With that, operator, please do open the line for questions.
Thank you. Ladies and gentlemen, should you have a question, please press the star followed by the one on your touch-tone phone. If you'd like to withdraw your question, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Meny Grauman from Scotiabank. Please go ahead.
Hi, good afternoon, Doddridge. First of all, just wanted to wish you all the best in your retirement. In terms of the questions, Andre, you talked about the $30 million accounting adjustment. Just wanted to get a better sense of what drove the change in treatment between net income and OCI. Was that your auditors coming to you and feeling more comfortable in that change? Just wanted a little bit more color there, please.
On the latter point, that's how it came about during the process of both, you know, the final audit, as well as the internal review that goes with our annual statements. You know, this was, this is a relatively chunky transaction that was done all within the U.S. segment. That the consolidation elimination got a relook at year-end, and I think once everyone was around the table, consensus was that it would be better classified through OCI, rather than net income.
Just to confirm that, I guess this now kind of completes this issue, or is there potential for some other impacts early in 2023?
No. This completes this issue. I think the issue is closed. Now that we're live to this, in terms of some of the possible effects of moving assets to our Bermuda subsidiary, now that we're putting more use to it, I think we would have eyes on it. I think from a practical point of view, this sort of adjustment wouldn't be necessary under IFRS 17 anyway, I wouldn't expect to see this again.
Thanks for that. On IFRS 17, thanks for the disclosure. Just wanted to understand if there was any impact to earnings on implementation. I know you started to talk about some of the earnings impacts related to the U.S. business, but on a consolidated basis. Wanted to make sure I understood if, you know, what you thought that earnings impact would be, if any.
Well, the guidance that we're giving in total, I think if you take our range of book value, and then multiply that by the 14%-16% anticipated return on equity for 2024, I think you can get to a range of total net income that we're comfortable targeting at this point. I think we, you know, we're already seeing that 2023 has the potential to have a lot of noise, a lot of noise in the income statement. We're gonna be positive and negative. I think we're talking about 2024 as a good clean year to drive your earnings estimates off of that.
You know, we'll certainly, once we get ivari closed and can show the full pro forma statements, we'll be able to get more granular in terms of segment by segment guidance. I did want to, you know, you heard in the prepared remarks net income at the segment level is gonna be more affected the faster the segments we're growing. The segment net income will be more affected at the U.S. than it would be at the more, the slower growth Caribbean subs. Likewise, pardon me, likewise with ivari, where it is growing, but not nearly as quickly as our U.S. segment.
Understood. In the same vein, I wanted to understand the impact or the potential impact on your capital ratio. I'm not sure how this impacts the MCCSR ratio. You know, we've heard about LICAT, but what's the capital implication of the transition to IFRS 17 for you?
Preliminarily, we are running, and you'll see this in the disclosure, some modifications on MCCSR so that it can stay consistent into 2023 and into IFRS 17. On that basis, we wouldn't expect our reported MCCSR to really change upon the transition. With respect to the acquisition, I think the latest numbers I've seen are that the acquisition of ivari on an MCCSR basis would be mildly accretive, neutral to mildly accretive.
At the current levels, would not put a strain on the capitalization. And as I said in the prepared remarks, we would be, you know, the actuarial team, once we're satisfied that we've cleared all the hurdles on the IFRS 17 transition, would be preparing to have a consolidated LICAT for us by the end of next year so that we can be more comparable to the Canadian public companies.
Understood. Thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Your next question comes from Darko Mihelic from RBC Capital Markets. Please go ahead.
Hi. Thank you. I wanted to follow up there a little bit, Andre, on what you just discussed, just to make sure that there's no misunderstanding. One of the things I heard you say was the shareholders' equity is $650-$725. The CSM is $1.2 billion-$1.3 billion. You then added them together, to give us some numbers, and then you gave us an ROE. I just want to be sure. When you quote the ROE between 14%-16%, what is the denominator you're using? The $650-$725 or the combination of shareholders' equity and CSM?
The former.
Okay. Okay.
There are discussions, I'm sure we'll talk about this as we get in throughout the year. You know, there are other companies are looking at ways of trying to measure growth in CSM as well. I would expect that we might. I stand by the answer mechanically in terms of our guidance. I think we will start doing some sort of modified figure that will tie closer back to IFRS 4, where we take net income and then add into it the growth in CSM, that, you know, you can try and draw a line between performance through the years.
Okay. One of the things you also mentioned was, you mentioned that ivari's normalized income performed well. Can you remind me how we are to think about normalized income versus what we see in the statements? There's quite a bit of variation in earnings from in reported earnings, I suppose, from 2021 to 2022. I'm just looking for some sort of a baseline of normalized earnings at ivari, I guess.
Sure. You know, this is an instance where, IFRS 17 going forward will clean that up significantly. I will ask George to talk about the high-level reconciliation between normalized net income and, you know, what you see in the unadjusted filed results.
Yeah. Hey, Darko, it's George. The place that I can point you to is on OSFI's website, I think you'll see their full year IFRS 4 results. There's some noise there that doesn't explain the full story, and it'll be clarified when they release their annual report that will show you some of the breakdown by source of earnings, including experience losses and methods and assumption changes. I think going forward, how to think about IFRS 17, you're gonna see some things that wouldn't run through the income statement based on how it's reflected. For example, one item being experience loss with how the equities have done, with the equity markets that gets reflected as a present value factor. That will be that will look materially different for the positive.
The other two major components is the seller-injected capital over the year. You'll still have much higher investment income, visible on the books that wasn't, there in 2022. Similarly with, the methods and assumption changes that you'll be able to see, I think over the next month, wouldn't be there as well. Compared to what you see in 2022, it will be materially higher compared to the prior year when we announced the transaction we disclosed what was on the net income side, again, levels higher than what was previously disclosed. Maybe I'll just pause there.
I understand there's a lot of noise in the numbers. Are you guys willing to talk the actual amount of noise or is it something that you guys can't talk about?
We're privy to more information that than what is publicly filed for ivari right now. It's better for us to connect the dots on their 2022 full financials once those are all disclosed.
Okay. Okay. Also as well, Andre, you mentioned that under IFRS 17, I just wanna make sure of a couple of things. Like I understand that in the U.S. business, you know, you're booking new business gains on sales. Is that actually the case for Sagicor Life? It seems like when I read through it seems like when you sell the annuities, there's also a very big offset on the liability side. I'm not suggesting that it's an onerous contract, but it doesn't seem that there's significant gains there. Am I correct in thinking about that?
They're not nearly as significant. There are gains from new business. You know, in some prior quarters, we have given you some guidance in terms of like new annual premium. The annualized premium gives rise to more significant new business gains dollar for dollar than the single premiums annuities do. The effect is still there, but because if those are much more mature lines of business, losing the new business gains, but then getting more emergence out of the CSM compared to the old, you know, rolling off of PfADs means that the net income is not gonna be as different as it is in the as it will be for the U.S.
Okay. Okay. I'm just trying to get a range of, in my mind anyway, of possible differences from IFRS 4 to IFRS 17 by segment.
Yeah.
You mentioned there might be some changes to the segments. Can you elaborate on that a little bit?
No, just in the sense that we will provide segment net income to connect the dots later in the year, we will tie the different segment guidance together especially once we're able to talk about a normalized number for ivari.
Okay. Okay. You mentioned a reinsurance transaction in the US. Now, you know, again, I hate to do this because it sounds like we're talking apples and oranges, right? I mean, next year or, sorry, 2023, we'll be talking about IFRS 17 earnings versus IFRS 4. I'm just trying to understand if the reinsurance agreement essentially means there's some earnings lost, and we should think about a run rate level of earnings in the US business is lower. Is that true? How and is it material?
I think directionally, you're right. I mean, we've chosen to allocate some risk off of our balance sheet. We pay a cost for that. It's a remote risk transaction, so we're keeping all the assets. It's right on the edge of materiality, so it's single digit $ millions a year.
I see. Okay. How would that show up under IFRS 17? Would that show up as just less CSM coming through?
Yes. You in effect, you know, if you're doing, it's less CSM, so it has the effect of you kinda take the whole brunt of it upfront, from a CSM point of view.
You made the decision to significantly slow production in the US. I mean, like, significant, you went, like, just $88 million, I guess, versus, like, the whole year of $1 billion, right?
Mm-hmm.
The question is, it sounds like it's capital motivated. Like, there's a trade-off, right? We think of this as potentially you could have done significantly more and built more CSM under IFRS 17, it would have cost a lot of capital. I guess the question is maybe bluntly asked, would you have continued or was it still as profitable to sell in the fourth quarter? Is it really ivari, where you need the capital for that kinda slowed down, where you slowed down production? Otherwise I would have thought, who cares? Like, just keep selling, right? Sell hundreds of millions of dollars of this and add to the CSM.
Am I thinking about that right, or was there actually a bit of a shift in profitability and that also led to a slowdown in production?
It's not the latter. The production that we had in Q4 was unusually profitable. That was part of the effect was, you know, to scale back production, we decrease rates out. That which we do sell, all things being equal, is gonna have wider spreads because where competitors are selling is in large part a reflection of where they're able to buy assets. Our spreads in Q4 were enormously wide. In a world of an unlimited amount of capital, we would have produced more. I think in a world of unlimited capital, we would, you know, we have an engine where we could be generating $2 billion+ a year with very, very good spreads.
We, you know, we would get to that critical mass in the U.S., quickly because, you know, we believe we've created a good little engine in our niche. We, we had a capital budget in terms of where we wanted to settle and set aside cash and debt capacity, so that if, you know, markets moved. We would be very comfortable bringing on board ivari. It's the right thing to do. That's where, you know, we would see ourselves having very meaningful cushions to go and throttle production back on in 2023 and beyond, based on where we are now.
Okay. That's what ultimately I was getting at, right? Which is, if you slow down production in Q4, it means absolutely nothing for Q1, Q2. You can throttle up production now and show very strong CSM growth, presumably under IFRS 17. Is this a situation where you're kinda gonna hold back on production until you close ivari?
No, no. We're back throttle on. You know, I would expect Q1. Well, I mean, we have with 95% of Q1 production under our belt, I can tell you we're well through $88 million in Q1.
Okay. Okay. That's where it's ultimately going with that. Okay. All right. Essentially you've given us some form of look-through into... I'm just curious, the look-through that you're giving in 2024 is because that includes a full year of ivari.
Yes.
As I'm sitting here fiddling with my 2023 model, I have to think of it as a half year, let's say, of ivari. Ivari, I thought, was neutral. Am I correct in that it's neutral to ROE? What is this?
It's n-
What is... Sorry, go ahead.
It's neutral to ROE. We are buying it at a meaningful discount to book value. The equity will go up and the net earnings will go up. That is, you know, on a full year difference, a full year basis, the difference between before and after. 2023 is gonna have lots of complications, both ways. You know, buying the asset at a discount, we may run some of that, some or all of that gain through the income statement. There's all sorts of asset price volatility in Q1. You know, we're sitting on better part of a $30 million gain today on our Playa shares in Q1.
you know, on the other hand, with spreads going out a bit on corporate bonds, but treasury rates going down, you know, if our bond portfolio largely hasn't moved in Q1, but the prescribed rates for liabilities may go down, you know, we may see that some volatility from the, you know, the asset decoupling from the liabilities. you know, we're gonna have unusually high IFRS costs, you know, spending with our consultants, unusually high audit costs with PwC. There, there's a whole lot of noise in 2023.
looking at 2024, I think by the time that ivari gets closed middle of the year and we've come out with all the disclosure, that's gonna be the, the clean forward run rate that we'd encourage folks to look at.
Okay. Okay. I think that's helpful. I think... To be clear, I think Are you leaning towards the fair value option for under IFRS 9 and essentially pushing all of those changes through the through the income and not going through OCI? Is that what you're leaning towards for for the changeover?
Anthony-
I realize you guys are already on IFRS 9. I realize that.
Right.
Is that how it's gonna end up going through in none of it through OCI?
Right now for assets, Anthony here. For assets, market, liabilities, yes. They will go through the income statement.
Okay.
Fair value through P&L.
Okay. What the other life cos have... I apologize for... Do you want me to requeue? Manny's come back for another question, but, I apologize for I don't mean to monopolize.
No, no. It's good.
I just have a lot of questions. Two things. One of the things that the other life cos are doing is they're sort of presenting a notion of normalized returns on investment returns, I suppose. Is that something that you are close to conceptually being able to provide as well so that we can get rid of all that noise? 'Cause it's all going through the income statement, so I'm wondering if we can just get rid of that noise.
We're in the process of pulling that together now. We've looked at what the other Canadians have put forward and now that we have our actual 2022 comparators compiled under 17, we are back testing to make sure that the answers make sense for us. We are going to have something like that, something like that to try and eliminate that noise.
Okay. And some of the other life cos had mentioned that they had to reposition their investments a little bit for IFRS 17. One of the life cos just did it now in Q1, or they're doing it in Q1. Another life co had done it all throughout the year and a little bit tag in happening in Q1. Is there something similar happening with you guys in terms of better ALM matching on the investment side? Will that also create some noise?
Short answer for old Sagicor, no. It meaningfully shifted ivari's thinking. I think we put some of that in the disclosure where before ivari held a significant portion of equity for the very long tail of their liabilities. You know, if you go back to our presentations from August or September where we said, you know, note, expect by the time we close their equity proportion of their balance sheet to be meaningfully stronger, that's the dynamic that's driving that.
Okay. Last question, I promise. When you close ivari... I mean, one of the things I was very interested in hearing is, you know, by the end of the year that you will move to a LICAT ratio. It sounded like you meant at the all company level. Presumably the Canadian business would also be subjected to the LICAT ratio as well at that sub, the Canadian sub. Am I correct to think-
Oh, yeah. Yes.
Okay.
Yes, yes, of course. Ivari has been running a LICAT calculation, you know, for the last year or so and is ready to go on that. Even our Jamaican sub is running a slightly Jamaican modified LICAT ratio that's gonna kick off in Q1, and we're working with the regulators there to do it. We're gonna have between Jamaica and Canada, that's gonna be more than half our balance sheet running LICAT anyway, or a version of it in the case of Jamaica. It'll just be a matter of doing something like what we do now for the MCCSR, which is rolling the US into it as well.
Okay. I guess where I was going with... Sorry, just to be clear, the LICAT ratio of ivari will be subject to oversight from OSFI, but not the overall...
Correct.
Okay. All right.
Yeah.
Perfect. Yeah, I think I understand that. That's very helpful, Andre. Thank you very much. Doddridge, all the best in retirement.
Thank you, guys.
Your next questions comes from Meny Grauman from Scotiabank. Please go ahead.
Hi, one last question for me. Just, there was a reference with respect to Sagicor Life on lingering effects of the pandemic, and just wanted to understand that better. What's going on there, and does that extend into your outlook for 2023? Just wanted to understand that a little bit better.
Yeah, this is consistent with the last couple of quarters. We've had, you know, a $2 million every quarter of adverse experience in SLI in pretty much each of the quarters this year. It's a combinations of things of higher claims ratios on group business and slightly adverse lapse experience and a little bit mortality in the life business. You know, all things being equal, we would have liked to have seen a net income in Q4, you know, pushing up into the higher teens. You know, it's the actuarial view that this is lingering effects from the pandemic.
You know, we are seeing some, finally some good green shoots in terms of the economies in the Caribbean. The tourism is very much back in places like Barbados. We are starting to see construction projects get off the ground again. It feels like that economy is starting to turn the corner. You know, Trinidad is slowly benefiting from the sustained higher energy prices. It's our hope that the performance, which is a little bit less than potential, will not persist all the way through 2023.
Thanks for that.
Presenters, there are no further question at this time. Please proceed with your closing remarks.
Great. Thank you, operator, and thank you everyone for joining the call today. A replay of this call, as usual, will be available for 1 month on our website, and a transcript will be posted as soon as available. If you have any additional questions, please do not hesitate to reach out to anyone of us. With that, thanks again for your participation and interest today. Have a great day, everyone.
Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.